17:0417(66)NG - AFGE Local 225 and Army, Army Armament Research and Development Command, Dover, NJ -- 1985 FLRAdec NG

[ v17 p417 ] 17:0417(66)NG
The decision of the Authority follows:

17 FLRA No. 66
AMERICAN FEDERATION OF
GOVERNMENT EMPLOYEES,
LOCAL 225, AFL-CIO
Union
and
DEPARTMENT OF THE ARMY,
U.S. ARMY ARMAMENT RESEARCH
AND DEVELOPMENT COMMAND,
DOVER, NEW JERSEY
Agency
Case No. 0-NG-617
DECISION AND ORDER ON NEGOTIABILITY ISSUES
The petition for review in this case comes before the Authority
pursuant to section 7105(a)(2)(E) of the Federal Service
Labor-Management Relations Statute (the Statute), and raises issues
concerning the negotiability of four Union proposals. Upon careful
consideration of the entire record, including the parties' contentions,
the Authority makes the following determinations.
Union Proposal 1
3. The Employer will insure that any cost study reflects the
most efficient in-house operation and is based on the same Scope
of Work as the contract proposal.
Union Proposal 2
5. The Employer agrees to utilize a Wage Determination area
which coincides with the Wage Grade Pay Survey area if wage grade
employees are involved in the CITA study.
Union Proposal 1 is concerned with the comparative cost analysis
which must be prepared by the Agency, in accordance with Office of
Management and Budget (OMB) Circular (Revised) No. A-76, prior to
deciding whether to perform an activity or function in-house or by
contract. In particular, the proposal would require the Agency, when it
calculates the costs of in-house operation, to consider such operations
at their most efficient as well as to consider the same in-house scope
of work as considered in the contract proposal. Union Proposal 2 would
require the Agency, according to its uncontroverted statements in the
record, "to use wage data from a specified wage determination area in
its contracting out studies if those studies involve wage grade
employees." /1/ Thus, the proposals are to the same effect as Proposals
1 and 2 in American Federation of Government Employees, AFL-CIO, Local
2736 and Department of the Air Force, Headquarters 379th Combat Support
Group (SAC), Wurtsmith Air Force Base, Michigan, 9 FLRA 733 (1982),
reversed and remanded sub nom. AFGE Local 2736 v. FLRA, 715 F.2d 627
(D.C. Cir. 1983), decision and order on remand, 14 FLRA No. 55 (1984),
which were found to be outside the duty to bargain because they directly
interfered with management's right under section 7106(a)(2)(B) of the
Statute "to make determinations with respect to contracting out." /2/ In
that case, the Authority found that Proposals 1 and 2 substantively
restricted how a cost study used in determining whether to contract out
could be conducted by prescribing standards to be used in evaluating
some of the factors upon which a contracting out determination could be
based. Therefore, for the reasons set forth in Wurtsmith Air Force
Base, Union Proposals 1 and 2 herein, which prescribe standards
management officials must use for evaluation when conducting cost
studies, are outside the duty to bargain under section 7106(a)(2)(B) of
the Statute. /3/
Accordingly, pursuant to section 2424.10 of the Authority's Rules and
Regulations, IT IS ORDERED that the Union's petition for review as to
Proposals 1 and 2 be, and it hereby is, dismissed.
Union Proposal 3
4. The Employer agrees to abide by the procedural requirements
of OMB Circular A-76 and further agrees that the cost comparison
generated under the Circular fully reflects all Government and
Contractor costs prior to deciding whether or not the contract
cost is the lowest bid. Arbitrary guideline figures in the
Circular (e.g., 4% for contract administration) will not be used
but rather all elements of the cost comparison will be identified
and the actual cost determined. In the case of Contract
Administration costs, for example, the cost of Government
Inspectors, Procurement support, etc. will be considered in
arriving at the cost. Copies of the cost comparison and backup
material will be provided to the Union.
Union Proposal 3 would require the Agency, among other things, to
include all costs involved with contract and in-house performance when
it prepares cost studies for comparison to determine which will provide
lowest performance cost. With respect to some of the costs to be
included, the proposal would prevent the Agency from using the arbitrary
guideline figures provided in the Circular by requiring the Agency to
include in the cost study only actual costs. According to the Agency,
the proposal conflicts with the OMB Circular, which it alleges is a
Government-wide rule or regulation, and thus is outside the duty to
bargain under section 7117(a)(1) of the Statute. /4/ As to this
contention, OMB Circular No. A-76 (Revised), including the Supplement
thereto, provides that agencies shall use standard cost factors, as
prescribed in the Supplement, in the preparation of cost comparisons.
/5/ Therefore, the proposal does conflict with the Circular and its
Supplement and would be outside the duty to bargain if the Circular
constitutes a "Government-wide rule or regulation" within the meaning of
the Statute.
In this connection, the Circular and its Supplement apply to all
executive agencies with some exceptions provided by law and thus are
applicable to Federal employees within the executive branch of
government. /6/ Consequently, the Circular and its Supplement are
generally applicable to the Federal civilian work force so as to be
"Government-wide" within the meaning of section 7117(a)(1) of the
Statute. See National Treasury Employees Union, Chapter 6 and Internal
Revenue Service, New Orleans District, 3 FLRA 748 (1980).
As to whether the provisions of the Circular and its Supplement
constitute a "rule or regulation" within the meaning of section
7117(a)(1), the Authority has previously concluded that Congress
intended that term to include "official declarations of policy of an
agency which are binding on officials and agencies to which they apply."
/7/ In this regard, the purpose of the Circular is to establish Federal
policy regarding the performance of commercial activities. (See
paragraph 1. Purpose, of the Circular.) The Circular and Supplement were
promulgated pursuant to The Budget and Accounting Act of 1921 (31 U.S.C.
1 et seq.) and The Office of Federal Procurement Policy Act Amendments
of 1979 (41 U.S.C. 401 et seq.). (See paragraph 3. Authority, of the
Circular.) The Circular and Supplement provide administrative direction
to heads of executive agencies. (See paragraph 7. Scope, of the
Circular.) The Circular seeks to ensure that its provisions and those of
its Supplement are followed. (See paragraph 9. Action Requirements, of
the Circular.) Therefore, it must be concluded that the Circular and its
Supplement establish official policy which is binding on agencies and
officials in the executive branch of the Federal government and thus
constitute a "rule or regulation" within the meaning of section
7117(a)(1). Consequently, the proposal is inconsistent with provisions
of a "Government-wide rule or regulation." Thus, even if, as the Union
claims, the proposal involves procedures which management will observe
in the exercise of its right to make determinations with respect to
contracting out under section 7106(a)(2)(B), it is outside the duty to
bargain as inconsistent with a Government-wide rule or regulation under
section 7117(a)(1) of the Statute. /8/
Accordingly, pursuant to section 2424.10 of the Authority's Rules and
Regulations, IT IS ORDERED that the petition for review of Union
Proposal 3 be, and it hereby is, dismissed. /9/
Union Proposal 4
6. Any disputes concerning whether the provisions of this
Article have been complied with shall be submitted to the
grievance/arbitration procedure. No contract shall be awarded
until all grievances arising out of the contracting out decision
have been resolved. In addition, no contract shall be awarded
until any appeal of the Department of Labor Wage Determination,
under the Federal Contract Services Act, is resolved.
Union Proposal 4 would include any dispute concerning compliance with
provisions of "this Article," i.e., the collective bargaining agreement,
within the scope and coverage of the negotiated grievance procedure. In
this regard, the proposal was proffered in the context of negotiations
in which the Union attempted to establish substantive contractual
limitations on management's authority to contract out under section
7106(a)(2)(B) of the Statute, see Proposals 1 and 2 herein. The Agency
in essence contends the proposal must be excluded from the scope and
coverage of the negotiated grievance procedure because it is
inconsistent with Federal law, i.e., section 7106(a)(2)(B) of the
Statute. That is, according to the Agency, Union Proposal 4 is
nonnegotiable under section 7106(a)(2)(B) because it would subject
management determinations with respect to contracting out to challenge
through the parties' negotiated grievance procedure. The Authority
agrees with the Agency that, based on the language of the proposal and
the record, and contrary to Union statements that the proposal is only
procedural in nature, the proposal provides that the scope of the
negotiated grievance procedure would cover grievances concerning
management determinations with respect to contracting out including the
decision to contract out itself. That is, by attempting to subject
compliance with provisions of "this Article" to the negotiated grievance
procedure in the context of these negotiations, the Union would have the
management determinations themselves be subject to the negotiated
grievance procedure.
In American Federation of Government Employees, AFL-CIO, Local 3403
and National Science Foundation, Washington, D.C., 6 FLRA 669 (1981),
the Authority held a proposal providing for grievances challenging
management determinations with respect to contracting out to be outside
the duty to bargain under section 7106(a)(2)(B) of the Statute. In that
case, the Authority cited to its decision in American Federation of
Government Employees, AFL-CIO, Local 1968 and Department of
Transportation, Saint Lawrence Seaway Development Corporation, Massena,
New York, 5 FLRA 70 (1981), enforced sub nom. AFGE, Local 1968 v. FLRA,
691 F.2d 565 (D.C. Cir. 1982), cert. denied, 103 S.Ct. 2085 (1983), that
no grievance procedure could be negotiated which would deny the
authority of an agency to exercise its management rights under section
7106.
Thus, since Union Proposal 4 herein would extend the coverage of the
negotiated grievance procedure to the decision to contract out itself,
it is for the reasons set forth in National Science Foundation and Saint
Lawrence Seaway Development Corporation inconsistent with section
7106(a)(2)(B) of the Statute. Therefore, this proposal is
distinguishable from Proposal 1 which was held negotiable in American
Federation of Government Employees, AFL-CIO, National Council of EEOC
Locals and Equal Employment Opportunity Commission, 10 FLRA 3 (1982),
enforced sub nom. EEOC v. FLRA, 744 F.2d 842 (D.C. Cir. 1984). That
proposal required management to exercise its right to make contracting
out determinations in accordance with whatever applicable laws and
regulations existed at the time of such action. Hence, the Authority
found the proposal contractually recognized external limitations on
management's right but did not establish, either expressly or by
incorporation, any particular substantive limitations on management and,
thus, the Authority decided the proposal was not inconsistent with
management's right "to make determinations with respect to contracting
out" under section 7106(a)(2)(B) of the Statute. In essence, Union
Proposal 4, as mentioned above, requires that contracting-out decisions
be made in accordance with provisions of the parties' collective
bargaining agreement and the Union is seeking to include provisions in
the parties' agreement which would establish substantive limitations on
management's authority in this regard. Thus, since the proposal, rather
than being only procedural in nature as was the proposal in Equal
Employment Opportunity Commission, would create substantive limitations
on management's authority to contract out, it must be found it to be
outside the duty to bargain. /10/
Accordingly, pursuant to section 2424.10 of the Authority's Rules and
Regulations, IT IS ORDERED that the petition for review of Union
Proposal 4 be, and it hereby is, dismissed. Issued, Washington, D.C.,
April 5, 1985
Henry B. Frazier III, Acting
Chairman
William J. McGinnis, Jr., Member
FEDERAL LABOR RELATIONS AUTHORITY
--------------- FOOTNOTES$ ---------------
/1/ Agency Statement of Position at 4.
/2/ Section 7106(a)(2)(B) provides in part:
Sec. 7106. Management rights
(a) Subject to subsection (b) of this section, nothing in this
chapter shall affect the authority of any management official of
any agency--
. . . .
(2) in accordance with applicable laws--
. . . .
(B) . . . to make determinations with respect to contracting
out . . . (.)
/3/ Accordingly, it is unnecessary to address the Agency's additional
contentions that Proposals 1 and 2 are not within its duty to bargain.
/4/ Section 7117(a)(1) provides:
Sec. 7117. Duty to bargain in good faith; compelling need;
duty to consult
(a)(1) Subject to paragraph (2) of this subsection, the duty to
bargain in good faith shall, to the extent not inconsistent with
any Federal law or any Government-wide rule or regulation, extend
to matters which are the subject of any rule or regulation only if
the rule or regulation is not a Government-wide rule or
regulation.
/5/ See OMB Circular No. A-76 (Revised), paragraph 6f, and Part I,
Chpt. 2, paragraph C of the Supplement (1983).
/6/ See OMB Circular No. A-76 (Revised), paragraph 7. Scope.
/7/ See National Federation of Federal Employees, Local 1497 and
Department of the Air Force, Lowry Air Force Base, Colo., 9 FLRA 151
(1982), at 154-55.
/8/ In so deciding, the Authority finds it unnecessary to consider
the Agency's other contentions concerning the nonnegotiability of the
proposal.
/9/ Cf. American Federation of Government Employees, AFL-CIO,
National Council of EEOC Locals and Equal Employment Opportunity
Commission, 10 FLRA 3 (1982), enforced sub nom. EEOC v. FLRA, 744 F.2d
842 (D.C. Cir. 1984) (a proposal that management would be required to
exercise its right to make contracting out determinations in accordance
with whatever applicable OMB directives, laws and regulations exist at
the time of such action would be negotiable); American Federation of
Government Employees, Local 225 and U.S. Army Armament, Research and
Development Command, Dover, New Jersey, 11 FLRA No. 108 (1983) (in the
absence of a union request in the record for the Authority to fragment
the proposal for separate consideration of the different matters
included therein, the Authority will consider the proposal as a whole
and make a single negotiability determination with respect thereto).
/10/ In so deciding, the Authority finds it unnecessary to consider
the Agency's other contentions concerning the nonnegotiability of the
proposal.